Luong Corporation, a calendar year, accrual basis corporation, reported $1.35 million of net income after tax on its financial statements prepared in accordance with GAAP. The corporation's books and records reveal the following information: • Luong's federal income tax expense per books was $207,000. • Luong's book income included $17,000 of dividends received from a domestic corporation in which Luong owns a 25 percent stock interest, and $7,500 of dividends from a domestic corporation in which Luong owns a 5 percent stock interest. • Luong recognized $17,000 of capital losses this year and no capital gains. • Luong recorded $11,600 of book expense for meals not provided by a restaurant and $13,500 of book expense for entertainment costs. • Luong's depreciation expense for book purposes totaled $407,000. MACRS depreciation was $475,000. Required: a. Compute Luong's federal taxable income and regular tax liability. b. Prepare a Schedule M-1, page 6, Form 1120, reconciling Luong's book and taxable income.
Luong Corporation, a calendar year, accrual basis corporation, reported $1.35 million of net income after tax on its financial statements prepared in accordance with GAAP. The corporation's books and records reveal the following information: • Luong's federal income tax expense per books was $207,000. • Luong's book income included $17,000 of dividends received from a domestic corporation in which Luong owns a 25 percent stock interest, and $7,500 of dividends from a domestic corporation in which Luong owns a 5 percent stock interest. • Luong recognized $17,000 of capital losses this year and no capital gains. • Luong recorded $11,600 of book expense for meals not provided by a restaurant and $13,500 of book expense for entertainment costs. • Luong's depreciation expense for book purposes totaled $407,000. MACRS depreciation was $475,000. Required: a. Compute Luong's federal taxable income and regular tax liability. b. Prepare a Schedule M-1, page 6, Form 1120, reconciling Luong's book and taxable income.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Problem 11-12 (Algo) [LO 11-3, 11-4]
Luong Corporation, a calendar year, accrual basis corporation, reported $1.35 million of net income after tax on its financial statements
prepared in accordance with GAAP. The corporation's books and records reveal the following information:
• Luong's federal income tax expense per books was $207,000.
• Luong's book income included $17,000 of dividends received from a domestic corporation in which Luong owns a 25 percent stock
interest, and $7,500 of dividends from a domestic corporation in which Luong owns a 5 percent stock interest.
• Luong recognized $17,000 of capital losses this year and no capital gains.
• Luong recorded $11,600 of book expense for meals not provided by a restaurant and $13,500 of book expense for entertainment
costs.
• Luong's depreciation expense for book purposes totaled $407,000. MACRS depreciation was $475,000.
Required:
a. Compute Luong's federal taxable income and regular tax liability.
b. Prepare a Schedule M-1, page 6, Form 1120, reconciling Luong's book and taxable income.
Complete this question by entering your answers in the tabs below.
Required A
Required B
Taxable income
Tax liability
Answer is not complete.
Compute Luong's federal taxable income and regular tax liability.
Note: Enter your answers in whole dollars not in millions.
Amount
$ 2,426,175 X
$ 510,299 X
< Required A
Required B >](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa53a9a99-75b6-411c-b6db-7002448aaf26%2F92b45e5b-9ae1-4eec-b935-900b00ff902a%2Furlfs0l_processed.png&w=3840&q=75)
Transcribed Image Text:Problem 11-12 (Algo) [LO 11-3, 11-4]
Luong Corporation, a calendar year, accrual basis corporation, reported $1.35 million of net income after tax on its financial statements
prepared in accordance with GAAP. The corporation's books and records reveal the following information:
• Luong's federal income tax expense per books was $207,000.
• Luong's book income included $17,000 of dividends received from a domestic corporation in which Luong owns a 25 percent stock
interest, and $7,500 of dividends from a domestic corporation in which Luong owns a 5 percent stock interest.
• Luong recognized $17,000 of capital losses this year and no capital gains.
• Luong recorded $11,600 of book expense for meals not provided by a restaurant and $13,500 of book expense for entertainment
costs.
• Luong's depreciation expense for book purposes totaled $407,000. MACRS depreciation was $475,000.
Required:
a. Compute Luong's federal taxable income and regular tax liability.
b. Prepare a Schedule M-1, page 6, Form 1120, reconciling Luong's book and taxable income.
Complete this question by entering your answers in the tabs below.
Required A
Required B
Taxable income
Tax liability
Answer is not complete.
Compute Luong's federal taxable income and regular tax liability.
Note: Enter your answers in whole dollars not in millions.
Amount
$ 2,426,175 X
$ 510,299 X
< Required A
Required B >
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